The most important event for the past trading week was considered to be the policy meeting of the European Central Bank, and it indeed did not disappoint, both fulfilling market expectations and surprising markets at the same time.
Traders were expecting the ECB to announce stimulus measures, and the central bank did indeed deliver. Yet the surprise came in the form of Mario Draghi’s suggestion that the ECB is likely to end interest rate cuts. This sent the euro sharply higher, helping the currency to end the week with gains against almost all most-liquid currencies (with the exception of the Australian dollar).
The ECB was not the only central bank to surprise markets as the Reserve Bank of New Zealand made an unexpected interest rate cut. Only the Bank of Canada refrained from surprise, keeping its monetary policy unchanged.
EUR/USD rallied 1.4% from 1.0909 to 1.1150 after touching the weekly low of 1.0844. EUR/JPY was up 1.2% from the open of 125.21 to 126.90, bouncing from the weekly minimum of 123.05. EUR/NZD gained 2.3% from 1.6188 to 1.6529 but retreated from 1.6839 — the highest level of the week. EUR/AUD ended trading at 1.4746, down from the opening rate of 1.4844.
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